Accounts Paper2

QUESTION #1.

PART A

Generally speaking, an asset is any item of property that has monetary value. Assets are shown in the balance sheets of businesses.

One requirement for an asset is that it must be acquired in a transaction. Your mechanical knowledge and skills is not included as an asset to the business due to the fact that firstly, they were not acquired in a specific transaction that your business took part in, such as when you bought your alignment machine.

Another requirement for recognition of an item as an asset is that its cost at the time of its acquisition must be able to be objectively measured. Your mechanical knowledge and skills cannot be objectively measured in dollars and cents. Your valuation of your knowledge or skill is a subjective judgment and another person evaluating the valuation of the same may not agree on your monetary valuation of such skills.

On the basis of these reasons your mechanical